If the Fed's policies aim to increase aggregate demand, the Fed must fear A. a supply...
If the Fed's policies aim to increase aggregate demand, the Fed must fear
A. a supply shock that increases aggregate supply.
B. a supply shock that decreases potential GDP.
C. stagflation.
D. recession.
E. inflation.
Homework Answers
Ans.- (E)
An increase in aggregate demand leads to higher output and price level. So, an increase in the price can become a cause of higher inflation.
If you have any doubt,feel free to ask.
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If the Fed's policies aim to increase aggregate
demand, the Fed must fear
A. a supply...
Question 56 (1 point) Consider the aggregate supply-aggregate demand model. How does an increase in aggregate...
Question 56 (1 point) Consider the aggregate supply-aggregate demand model. How does an increase in aggregate demand affect the unemployment rate and the inflation rate? LRAS: SRAS Price level (GDP deflator 2009 = 100) AD AD AD GDP, GDP, GDP AD AD AD2 GDP, GDP, GDP; Real GDP (trillions of 2009 dollars) The unemployment rate decreases and the inflation rate increases. ia The unemployment rate increases and the inflation rate decreases. Both the unemployment rate and the inflation rate increase....
A supply shock is A. an increase in the rate of inflation as a result of...
A supply shock is A. an increase in the rate of inflation as a result of expansionary fiscal policy, resulting in a leftward shift of the SRAS curve. B. a sudden increase in the price of an important natural resource, resulting in a leftward shift of the SRAS curve. O C. an increase potential GDP caused by a govemment expenditure multiplier, resulting in a leftward shift of the AD curve. D. an increase in both the inflation and the unemployment...
Unit 3: Aggregate Demand, Aggregate Supply, and Fiscal Policy AD, AS, and LRAS Short Run vs....
Unit 3: Aggregate Demand, Aggregate Supply, and Fiscal Policy AD, AS, and LRAS Short Run vs. Long Run Aggregate Supply Draw the economy at full employment 1. In the short run, wages and resource prices will as price levels increase 2. In the long run, wages and resource prices will as price levels increase Shifters of AD and AS Shifters of Aggregate Demand Shifters of Aggregate Supply imi Recessionary Gap Draw an economy in a recession Inflationary Gap Draw an...
of 40> Suppose the Fed sells $500 billion in government securities and the reserve ratio is...
of 40> Suppose the Fed sells $500 billion in government securities and the reserve ratio is 0.1. Calculate the resulting change in the money supply. Be certain to include a negative sign. change in the money supply: $ billion Next, show the impact this open market operation wilEhave on the graph in the short run 10 Solow growth curve Short-run aggregate supply 7 Next, show the impact this open market operation will have on the graph in the short run....
QUESTION 8 In Productovia, aggregate demand increases and aggregate supply decreases. Based on the shifts in these...
QUESTION 8 In Productovia, aggregate demand increases and aggregate supply decreases. Based on the shifts in these two curves, what is a likely outcome? deflation higher taxes lower imports inflation QUESTIONS As GDP decreases, tax revenues Causing to aggregate demand deeline testraint decline stimulus increase restraint increase stimulus
A supply shock causes a shift in: a. long-run aggregate supply. b. aggregate demand. c. short-run and long-run aggregat...
A supply shock causes a shift in:
a. long-run aggregate supply.
b. aggregate demand.
c. short-run and long-run aggregate supply.
d. short-run aggregate supply.
e. aggregate demand and short-run aggregate supply.
Consider the exhibit below for the following questions.
Figure 20-1
Refer to Figure 20-1. The economy would be moving to long-run
equilibrium if it started at
a. A and moved to B.
b. C and moved to B.
c. D and moved to C.
d. None of the above...
Complete the sentences. Aggregate demand increases if expected future income, inflation, or profits And aggregate demand...
Complete the sentences. Aggregate demand increases if expected future income, inflation, or profits And aggregate demand increases if fiscal policy government expenditure. SA O A. decrease; increases O B. increase; decreases OC. decrease, decreases OD. increase: increases Aggregate demand increases if fiscal policy transfer payments O A. decreases; increases OB. increases; increases O C. increases; decreases OD. decreases, decreases Aggregate demand increases if monetary policy the quantity of money and interest rates Click to select your answer. Complete the sentences....
Whenever the general level of prices rises because of continual increases in aggregate demand, we say...
Whenever the general level of prices rises because of continual increases in aggregate demand, we say that the economy is experiencing O A. monetary stagflation. O B. aggregate supply shock. O C. demand-side inflation OD. supply-side inflation. Click to select your answer.
when all other influences on expenditure plans remain the same. Aggregate demand is the relationship between...
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In the graph, the initial aggregate supply curve is AS and the initial aggregate demand curve...
In the graph, the initial aggregate supply curve is AS and the initial aggregate demand curve is ADo Some events that could have changed aggregate demand from AD, to AD are O A. a fall in the exchange rate or Price level 0 AS AS an increase in expected future inflation O B. a decrease in the money wage rate or 105 10 an increase in potential GDP ( 100 C. a decrease in expected future income or a decrease...
Question 56 (1 point) Consider the aggregate supply-aggregate demand model. How does an increase in aggregate demand affect the unemployment rate and the inflation rate? LRAS: SRAS Price level (GDP deflator 2009 = 100) AD AD AD GDP, GDP, GDP AD AD AD2 GDP, GDP, GDP; Real GDP (trillions of 2009 dollars) The unemployment rate decreases and the inflation rate increases. ia The unemployment rate increases and the inflation rate decreases. Both the unemployment rate and the inflation rate increase....
A supply shock is A. an increase in the rate of inflation as a result of expansionary fiscal policy, resulting in a leftward shift of the SRAS curve. B. a sudden increase in the price of an important natural resource, resulting in a leftward shift of the SRAS curve. O C. an increase potential GDP caused by a govemment expenditure multiplier, resulting in a leftward shift of the AD curve. D. an increase in both the inflation and the unemployment...
Unit 3: Aggregate Demand, Aggregate Supply, and Fiscal Policy AD, AS, and LRAS Short Run vs. Long Run Aggregate Supply Draw the economy at full employment 1. In the short run, wages and resource prices will as price levels increase 2. In the long run, wages and resource prices will as price levels increase Shifters of AD and AS Shifters of Aggregate Demand Shifters of Aggregate Supply imi Recessionary Gap Draw an economy in a recession Inflationary Gap Draw an...
of 40> Suppose the Fed sells $500 billion in government securities and the reserve ratio is 0.1. Calculate the resulting change in the money supply. Be certain to include a negative sign. change in the money supply: $ billion Next, show the impact this open market operation wilEhave on the graph in the short run 10 Solow growth curve Short-run aggregate supply 7 Next, show the impact this open market operation will have on the graph in the short run....
QUESTION 8 In Productovia, aggregate demand increases and aggregate supply decreases. Based on the shifts in these two curves, what is a likely outcome? deflation higher taxes lower imports inflation QUESTIONS As GDP decreases, tax revenues Causing to aggregate demand deeline testraint decline stimulus increase restraint increase stimulus
A supply shock causes a shift in:
a. long-run aggregate supply.
b. aggregate demand.
c. short-run and long-run aggregate supply.
d. short-run aggregate supply.
e. aggregate demand and short-run aggregate supply.
Consider the exhibit below for the following questions.
Figure 20-1
Refer to Figure 20-1. The economy would be moving to long-run
equilibrium if it started at
a. A and moved to B.
b. C and moved to B.
c. D and moved to C.
d. None of the above...
Complete the sentences. Aggregate demand increases if expected future income, inflation, or profits And aggregate demand increases if fiscal policy government expenditure. SA O A. decrease; increases O B. increase; decreases OC. decrease, decreases OD. increase: increases Aggregate demand increases if fiscal policy transfer payments O A. decreases; increases OB. increases; increases O C. increases; decreases OD. decreases, decreases Aggregate demand increases if monetary policy the quantity of money and interest rates Click to select your answer. Complete the sentences....
Whenever the general level of prices rises because of continual increases in aggregate demand, we say that the economy is experiencing O A. monetary stagflation. O B. aggregate supply shock. O C. demand-side inflation OD. supply-side inflation. Click to select your answer.
when all other influences on expenditure plans remain the same. Aggregate demand is the relationship between the quantity of demanded and the OA. real GDP, price level O B. nominal GDP, interest rate O C. real GDP; exchange rate O D. nominal GDP, quantity of output supplied What is stagflation and why does cost-push inflation cause stagflation? Stagflation is a combination of a in the price level and in real GDP O A. rise; a decrease O B. fall; a...
In the graph, the initial aggregate supply curve is AS and the initial aggregate demand curve is ADo Some events that could have changed aggregate demand from AD, to AD are O A. a fall in the exchange rate or Price level 0 AS AS an increase in expected future inflation O B. a decrease in the money wage rate or 105 10 an increase in potential GDP ( 100 C. a decrease in expected future income or a decrease...
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